A business needs capital to function. A startup business could need funding to buy equipment and supplies, while an established business could need financing to expand or cover unexpected expenses. Whatever the reason, a business seeking financing has several options at its disposal to get the money it needs to keep the doors open. The type of financing a business should seek will depend on the need for the funding and its financial stability.

Approach local banks and financial institutions for financing. To attain a bank loan, a small business will need two things: a business plan and a full accounting of all principal owner&#039;s personal assets. Loan officers need to determine if the business would be a good investment for their bank and if the owners pay their own bills because, this could be an indication of how business debt will be repaid. Write a business plan that is an accurate representation of the proposed business structure, short and long-term goals, and how any invested monies will be used and repaid. The amount of importance attached to the principal&#039;s personal financial situation will depend on the business structure and how many assets the business itself already has.

Seek private investors, such as venture capitalists, local business development agencies and foundations, and prominent philanthropists known for investing in small businesses. If you are not seeking a large amount of funding for your business, pursuing private investors could be a less expensive approach to attaining funding. Check the business section of your local paper for individuals or businesses that have offered such financial assistance in the past and put together a proposal for them. Again, you will need a business plan and it would be a good idea to practice presenting your business idea because this is often required when seeking funding from private sources.

Approach family and friends who might be willing to float a loan for the business. Those closest to you know you best and might be more willing to invest their money in your dream. However, it is important to ensure that any investment made is put into writing, including when the loan will be repaid and how. Also, do not take it personally if friends or family decline to invest in your business. It is not necessarily a reflection of how they feel about you or your business idea, it could be a bad time for them to risk money.

Tips

Make sure the business' financials are as accurate as possible. A business should also have a budget and a three to five-year financial projection as part of its business plan. This shows potential investors that the business has a plan to remain in business for the long term.

Venture capitalists tend to focus on certain industries, such as medical instruments and equipment, information technology and other internet and technology-based industries that introduce new ways to generate advertising. If your business falls within those parameters, seeking venture funding could be ideal.

Warning

If possible, do not wait until the situation is dire to seek financing. This could be perceived as poor business management by potential investors. Of course unforeseen circumstances can cause a business to need emergency financing, but if it is apparent that additional financing will be needed, the quicker a business presents its case to financials, the better.

About the Author

K.A. Francis is a freelance writer with over 15 years experience, and a small business consultant and jewelry designer. She holds a Bachelor of Arts in English and business administration and a Master of Arts. She has written for "The Einkwell," "Windsor Parent," MomsOnline, Writer's Stew, Lighthouse Venture Group and others. Her jewelry design company, KAF Creations, has been in operation since 1998.